President of the African Development Bank speaks about the Africa50 plan.
Dr Donald Kaberuka, the president of the African Development Bank has given an interview in which he discusses his thoughts on Africa50, the ambitious plan to increase the rate of infrastructure delivery across the continent by leveraging capital from Africa’s own institutions and attracting vastly increased investment from private equity around the world.
Speaking to All Africa, Kaberuka says that in order to service the US$92 billion annual cost of infrastructure in Africa, the continent should “use the limited amount of public resources available to leverage additional resources in the capital markets. But to do that, we will have to build a vehicle with an equity base based on Africa’s own pools of savings. And on those bases we go into the market to raise money”.
A former Rwandan finance minister, Kaberuka is now into his second term as head of the African Development Bank, and has overseen an increased stability in the bank’s finances, with the institution now holding a triple-A credit designation from international credit firms. In 2013 Kaberuka was named ‘African of the Year’ by the Daily Trust for his work on Africa50.
Kaberuka says: “Africa50 is about transformational, commercially viable projects of regional significance. It’s about using Africa’s own savings to leverage the private sector, and it is a tool to make a whole range of projects in the PIDA program – the Priority Infrastructure Development for Africa – bankable and commercially viable.
These pools of savings are currently invested in the U.S. and Europe. They are looking for a good return, they are looking for liquidity, and they are looking for security. Africa50 seeks to provide those three. Maybe do even better on the returns. At the moment, because of the QE [quantitative easing, the monetary policy pursued by the U.S. Federal Reserve Bank, which lowers interest rates] and the financial markets, the return is not particularly attractive. I think we can provide a better return. I think we can provide the liquidity. I think we can provide security, at the same time building Africa’s transformational infrastructure.”
Kaberuka has identified accelerated infrastructure development as being reliant on improved energy policy, saying: “Our analysis at Africa50 is that energy is the next revolution, and next are maritime ports, railways, highways and airports….whether you are a small garage owner in northern Nigeria or a woman owning a boutique in the city or you own a cement factory, it is power cuts for half a day for three days a week which eat into your margins, which eat into your possibilities of creating jobs. So this focus on infrastructure is precisely the starting point for creating jobs. You cannot create jobs unless the country has energy which is available, affordable and sustainable.
Finally, we need to rethink safety nets. We need to figure out how to provide a safety net to poor people, whether it is by transferring some money from oil and gas revenues, by removing wasteful subsidies and better targeting them to the poor. All these things can be done. So – tackle inequality, tackle sources of growth, and figure out how to remove some of these barriers to growth like energy.That’s how jobs are created.”